Newswire (ASIa‑Pacific) — A still‑disrupted Strait of Hormuz, tanker attacks, and deadlocked US‑Iran peace talks. Six months ago, any of these factors would have been enough to push oil prices back above $100 per barrel. Yet in August this year, energy markets have barely reacted to these developments.
What is truly surprising is not what is happening at the world’s most critical crude‑oil chokepoint, but why oil markets no longer react to such risks as they did only a few months ago.
Between shifting news headlines and oil‑price charts, markets appear to have lost their impulse to panic. #IranCrisisTracking#
Oil prices have moved almost sideways this month. As of late Friday, August 14, the most‑active October Brent crude futures settled at $88.52 per barrel, down roughly 1.7% since the start of August. September WTI crude futures fell about 2.7% over the same period, closing last week at $82.40 per barrel.
Uncertainty PeRSIsts Across the Strait of Hormuz
That does not mean the situation in the Strait of Hormuz is close to resolution.
Just last week, two more vessels came under attack and shipping transit through the strait nearly ground to a halt. The United States has stated it can maintain its maritime blockade against Iran indefinitely. Negotiations between Washington and Tehran aimed at suspending military strikes appear deadlocked, with both sides publicly laying out their respective demands.
US Treasury Secretary Bessent stated the United States will soon announce unprecedented “economic isolation” measures targeting Iran, stepping up the Trump administration’s campaign to force concessions from Tehran after nearly six months of hostilities.
Oil prices are not climbing further not because the war is ending or because the Strait of Hormuz is about to reopen.
The real reason: the global economy is learning to operate with far less oil.
A Precursor to Future Economic Weakness?
Beneath this dynamic lie more worrying signals. Economists warn that soft crude‑oil demand may foreshadow weaker economic performance ahead.
The International Energy Agency now expects global oil‑demand declines this year could exceed prior projections. Its latest forecast shows global oil demand in 2026 will fall by 1.6 million barrels per day, a downward revision of 510,000 barrels per day from its July estimate, driven largely by high fuel prices further suppressing consumption.
Some analysts believe soft demand will keep weighing on oil prices for the remainder of the year, even if full shipping capacity through the Strait of Hormuz is not restored.
EurASIa Group analysts project US‑Iran tensions may ease in September, allowing partial reopening of the Strait of Hormuz.
Even if traffic recovers to only 30%‑50% of pre‑conflict levels, they note existing oil flows “may still be sufficient to meet demand”. Under that scenario, crude futures could drop into the $65‑$80 per‑barrel range.
Still, such forecasts must be treated with caution.
Phil Flynn, Senior Market Analyst at Price Futures Group, notes the IEA, US Energy Information Administration, OPEC and other bodies have frequently underestimated actual crude‑oil demand in the past, requiring repeated upward adjustments to later forecasts.
A surprise large build in US commercial crude inventories last week also helped cap oil prices.
Data from the US Energy Information Administration shows commercial crude stocks rose sharply on lower exports and higher imports, particularly rising arrivals from Venezuela.
For the week ending August 7, US commercial crude inventories increased by 17.4 million barrels to 424.4 million barrels. Typical weekly inventory builds normally range between 1‑5 million barrels.
Kpler analyst Matt Smith described this as the second‑largest weekly crude‑inventory build on record. Analysts polled by The Wall Street Journal had expected a 600,000‑barrel drawdown.
Markets No Longer Expect a Formal US‑Iran Deal?
Analysts at Oxford Economics say they no longer anticipate a formal agreement between the United States and Iran.
They expect instead a prolonged, on‑again‑off‑again conflict that keeps crude flows through the Strait of Hormuz volatile. Under that baseline, Brent crude could average in the mid‑$80s for the rest of 2026.
The house still projects an overall downward trend for oil prices even amid prolonged strait disruptions, alongside a gradual recovery in PeRSIan Gulf crude exports.
Contributing factors include intermittent openings of the waterway, informal arrangements, and the gradual build‑out of alternative diveRSIon capacity, all of which mitigate physical supply losses. Ample global inventories plus soft Chinese demand further buffer the market.
According to Flynn, markets are far less fearful of permanent global oil shortages.
Product Markets Are Sending Out Warning Signals
The longer a conflict peRSIsts, the less markets may react, as participants adapt and develop alternative shipping and supply solutions.
That said, falling crude demand does not guarantee cheaper end‑user energy prices.
While crude‑oil prices remain relatively calm, more serious pressures are building across gasoline, diesel, jet fuel and other refined‑product markets.
Tracy Shuchart, Senior Economist at NinjaTrader, argues refined‑product prices may impact consumer wallets more directly than crude itself.
Traders closely monitor crack spreads — the margin between the value of finished gasoline produced from a barrel of crude and the cost of that barrel. FactSet data shows these spreads have widened dramatically recently, hitting all‑time highs.
The main driver: while global crude supply remains relatively stable, geopolitical friction plus refinery outages have stretched worldwide refining capacity extremely tight.
Shuchart notes many market participants still price in a positive eventual resolution to global conflicts, which is why crude prices remain contained for now.
Yet markets are overly focused on near‑term crude contracts, when real pressure lies elsewhere.
“Crack spreads have hit record highs, and refined‑product markets are flashing very strong warning signals,” she said.